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As the meal gets costlier

April 23 - 29, 2008
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Gulf Weekly Stan Szecowka
By Stan Szecowka

Recently in the Philippines, officials raided warehouses in Manila looking for unscrupulous traders hoarding rice, while in South Korea, panicked housewives stripped grocery-store shelves of food when the cost of ramen, an instant noodle made from wheat, suddenly rose.

The shadow of "a new hunger" that has made food too expensive for millions is the result of a sudden and dramatic surge in food prices around the world.

Rising prices for all the world's crucial cereal crops and growing fears of scarcity are enveloping international markets, creating turmoil.

As world rice prices soared by as much as 30 per cent in one day, Egypt decided to suspend rice exports for six months to meet domestic demand and to try to limit price increases.

That was bad news for its main rice customers - Turkey, Lebanon, Syria and Jordan.

Egypt's move was matched by Vietnam, the world's second-largest rice exporter after Thailand, which cut exports by 25 per cent and ordered officials not to sign any more export contracts this year.

India and Cambodia also rushed to curb their exports in order to have enough supplies to feed their own people.

With global crop shortages coming at a time when global demand is rising, prices for many basic goods including rice, wheat, dairy and cooking oil have been rising dramatically throughout the Middle East.

That leaves the Arabian Gulf countries no choice but address growing food security concerns by lessening their $10 billion dependency on imports.

In the past few months, there have been food riots or demonstrations - albeit on a smaller scale - against rising food prices in a number of countries in the region, including Bahrain, Jordan, Lebanon, Morocco, Saudi Arabia and Yemen. A number of people have died in clashes with security forces.

Global warming, the collapsing dollar, population explosion and even alternative fuels are all being blamed for plunging the world into the biggest crisis of the 21st century.

The World Bank says international food prices have risen by 75 per cent since 2000, while wheat prices have increased by 200 per cent. The cost of staples such as rice and soyabean has also hit record highs, while corn is at its most expensive in 12 years. The increasing cost of grains is pushing up the price of meat, poultry, eggs and dairy products

For the world's poorest people, the price spikes are disastrous. Aid officials say that millions who previously eked out enough to feed their families can no longer afford the food in their local stores, and are seeking help from relief organisations.

"We are seeing a new face of hunger," says Josette Sheeran, executive director of the UN's World Food Programme (WFP).

"People who were not in the urgent category are now moving into that category."

She bluntly told Western donors that WFP will trim its aid programmes this year unless it can raise an extra $500 million to cover the rising cost of the food that it now provides to about 73 million people, including many who survive on just 50 cents a day.

Food prices in the United Arab Emirates, for example, are estimated to have risen by 30 per cent last year and are expected to increase by as much as 40 per cent this year.

Bahrain's Prime Minister Shaikh Khalifa bin Salman Al Khalifa recently spoke of the need for Arab countries to achieve self-sufficiency in food production and reduce dependence.

A number of Gulf states have introduced price controls, including food subsidies and caps on rent increases, to offset the impact of price rises on their populations. The Omani Chamber of Commerce and Industry, for example, has proposed that food suppliers should control price rises by introducing ceilings on nine basic food items, including rice, wheat flour, sugar, lentils, cooking oil, tea, milk powder, evaporated milk and ghee.

The forecast is grim. Governments might quell the protests, but bringing down food prices could take at least a decade, food analysts say.

One reason: billions of people are buying ever-greater quantities of food - especially in booming China and India, where many have stopped growing their own food and now have the cash to buy a lot more of it. Increasing meat consumption, for example, has helped drive up demand for grain, and with it the price.

There are other problems too. The spike in oil prices, which hit $115 per barrel in recent days, has pushed up fertiliser prices, as well as the cost of trucking food from farms to local markets and shipping it abroad. Then there is climate change. Harvests have been seriously disrupted by freak weather, including prolonged droughts in Australia and southern Africa, floods in West Africa, and this past winter's deep frost in China and record-breaking warmth in northern Europe.

While the Middle East has been witnessing significant agricultural development, there is a long way to go. The GCC countries must still rely on the rest of the world for 90 per cent of their food and feed requirements. Annual food imports to the UAE alone amount to a staggering $3.5 to $4 billion.

The region has to overcome a harsh climate, limited water resources and poor soil conditions to build indigenous production by acquiring modern technologies, equipment and expertise and shifting investment trends toward the development of the agricultural sector.

For example, agricultural development in recent years in the UAE has seen more than 723,738 hectares of once barren land transformed for cultivation. There are now over 6,313 greenhouses and 22,797 farms spread throughout the country.

The growing demands of an ever-increasing population, combined with the need to reduce dependency on imports are, despite the crisis, ironically, providing a business opportunity to agricultural industries in the region.







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